IRS Publishes Rules That Could Controversially Extend Tax Credit to Biomass
WASHINGTON — The Internal Revenue Service on Monday published draft regulations that environmentalists fear could open the door to federal subsidies for biomass, a form of renewable feedstock they consider as harmful as fossil fuels.
The rule published in Monday’s Federal Register would establish regulations related to the clean electricity production credit and the clean electricity investment credit established by the Inflation Reduction Act.
Those regulations would cover everything from determining the greenhouse gas emissions rates resulting from the production of electricity to determining eligibility for these credits in various circumstances.
The proposed regulations would affect all taxpayers who produce clean electricity and claim the clean electricity production credit with respect to a facility or the clean electricity investment credit with respect to a facility or energy storage technology placed in service after 2024.
The publication of the rule opens a public comment period that extends through Aug. 2. The IRS is encouraging those who wish to comment to submit them electronically via the Federal eRulemaking Portal at https://www.regulations.gov.
In addition, a public hearing on the proposed regulations is scheduled to be held on Aug. 12 at 10 a.m., with a second, telephone-only hearing scheduled on Aug. 13 at 10 a.m.
The agency said in a press release that requests to speak at the hearings and outlines of topics to be discussed must be received by Aug. 2.
“If no outlines are received by Aug. 2, 2024, the public hearing will be canceled,” it said.
Those wishing to send paper submissions can do so by forwarding them to: CC:PA:01:PR (REG-119283-23), Room 5203, Internal Revenue Service, P.O. Box 7604, Ben Franklin Station, Washington, D.C. 20044.
But at least one group that is already commenting publicly is taking a dim view of the proposal.
According to Heather Hillaker, a senior attorney with the Southern Environmental Law Center, providing a tax credit to bolster the biomass industry would do far more harm than good when it comes to combating climate change.
“Cutting down and burning trees for energy makes climate change worse, devastates forests, and harms local communities,” Hillaker said. “These draft regulations ask some important questions, but the biggest question I have is why the Biden administration would even consider undermining its climate goals and environmental justice efforts by subsidizing the flailing biomass industry.
“This industry does double duty contributing to climate change by clear-cutting trees that are part of the climate solution and burning them, releasing even more carbon than coal,” she continued. “We can only deliver on the promise of the Inflation Reduction Act if we’re investing in real clean energy sources, like solar and wind power, that help address climate change and support thriving communities.
“The Biden administration should look at the facts about this industry before it gets duped by biomass companies looking to make a buck on the backs of taxpayers, our communities and our environment,” Hillaker added.
Dan can be reached at [email protected] and @DanMcCue
